Did You See THIS? Hedge Funds Are Buying CRYPTO!!

Hedge funds are accumulating crypto this Was revealed in a recent report which Also found that almost every hedge fund Expects the crypto Market to rise Significantly over the next year however Some hedge funds reported being hesitant About investing in crypto despite this Perspective and not just because of Unreasonable crypto regulations in the United States Today we're going to summarize this Report and tell you exactly what its Findings could mean for the crypto Market The report we'll be summarizing today is Titled quote rebuilding confidence in Crypto It was written by a consulting firm Pricewaterhousecoopers and with the help Of crypto asset manager coin shares and The alternative investment management Association or Aman the link to the full Report is in the description now the Report begins with a brief introduction Wherein the authors explain that their Findings come from two surveys that were Conducted in q1 this year coin shares Helped with the first survey of 131 Crypto hedge funds whereas AMA helped With the second survey of 61 traditional Hedge funds The authors then list some key takeaways Crypto hedge funds want to see Regulations around the segregation of

Customer and Company crypto regulations Around crypto auditing regulations Around asset reserves and an increase in Crypto platform security and liquidity This makes sense considering that U.S Regulators have effectively instructed Traditional financial institutions to Stop holding crypto and servicing the Industry while the SEC has been Reportedly cracking down on crypto Custody practices among institutions To prepare for these regulations and Address these pain points crypto hedge Funds have increased their use of Liquidity management tools improved Their counterparty risk management Expanded their crypto custody Solutions And increased their use of decentralized Exchanges or dexes In any case when it comes to the Traditional hedge funds the authors Found that most of them think that the Events of 2022 have done serious damage To the reputation of the crypto industry That is terror's collapse ftx's Implosion etc Etc as a result they're hesitant to Invest in crypto for reputational Reasons for what it's worth the authors Also found that around 30 percent of Traditional hedge funds are still Investing in crypto a modest decline From the 37 in the previous year of Course this ultimately depends on your

Definition of crypto coins and tokens Like eth are very different from Exchanges like coinbase Unfortunately the authors don't seem to Provide a definition of what they mean By crypto but at least they didn't throw The blockchain buzzword around that Would be a giveaway that these hedge Funds aren't actually investing in Crypto just centralized copycats Regardless the authors found that a Quarter of traditional hedge funds Already investing in crypto are Reconsidering their decision as a result Of the regulatory Crackdown in the United States this is not at all Surprising given that financial Institutions that continue to serve as Crypto have been met with undue scrutiny You can learn more about the ongoing Crypto Crackdown using the link in the Description Anyways the first part of the report Takes a closer look at how crypto hedge Funds see the industry and the market The authors start by revealing that 34 Of the hedge funds they surveyed were Based in the Cayman Islands 28 were Based in the US and 11 were based in the British Virgin Islands the rest were Based in other jurisdictions and some of These hedge funds voluntarily disclosed Their names we didn't recognize any if You do drop a comment in the description

And tell us which ones now the authors Reveal that most crypto hedge funds are Mostly neutral but have started to go Long on the crypto market I'll remind You that this survey was conducted in q1 It's possible that the number of crypto Hedge funds that have gone long since Then is significantly higher what with All the spot Bitcoin ETF hype more about That in the description as well I Digress Here is where things get juicy the Authors found exactly which crypto Projects crypto hedge funds are Accumulating their largest allocations Are in so-called store of value cryptos Which include BTC and eth followed by Infrastructure cryptos mostly so-called Ethereum Killers defy and layer twos the Authors note that most crypto hedge Funds have eth as their largest holding But caution that these funds will change Their allocations if ethereum doesn't Deliver on its scaling promises they Note this is a part of why competing Layer ones and layer 2s also account for A large portion of their portfolios Given these allocations it should come As no surprise that these hedge funds Got absolutely wrecked last year at the Authors note an average decline in Assets under management of 31 and a Median decline in AUM of over 50 percent Somehow it's still not as bad as

Investing in big Tech in 2022 it's also Important to put these losses into Perspective as you can see here the Various Strategies employed by hedge Funds managed to hedge their portfolios Against btc's crash in 2022 The Only Exception being future of funds Investing Market neutral hedge funds Inched out a small profit of 0.3 percent And it's here where the authors note That 93 of crypto hedge funds expect Crypto prices to rise significantly by The end of the year now I'd be remiss if I didn't point out that crypto hedge Funds are likely biased when it comes to Their crypto predictions even so ending The year higher seems like a realistic Expectation here's where things get Juicy again the authors found exactly Which crypto projects these hedge funds Are actively trading I'll name them all Because this is Vital Information Solana polygon uni swap Avalanche Polkadot chain link cardano xrp Litecoin Dogecoin Tron and uh Shiba Inu if you're Trading any of these cryptos be aware That you are literally trading against Crypto hedge funds oddly enough the list Also includes binance coin and una said Leo the exchange tokens for finance and Bitfinex respectively Some would say that this would explain Their peculiar price action speculation Aside the authors found some juicy stuff

About stable coins too they found that Hedge funds are using usdc and usdt in Roughly equal proportions and still have Significant exposure to busd now this is Eye-opening because U.S Regulators Instructed paxos to stop minting busd in Mid-February so this begs the question Of whether the survey was conducted Before this order if it was then this Finding makes perfect sense if it wasn't However then it suggests that some Crypto hedge funds have significant Exposure to busd which you'll know is Not only used heavily on binance but Also in bnb's ecosystem more about what That means for the market in the Description moving on now if that wasn't Spooky enough the authors found that Almost half of crypto hedge funds had Exposure to Terror when it collapsed Last May funnily enough it was the Mostly Market neutral hedge funds that Had the highest exposure to Terror Recall that they saw modest gains in AUM In 2022 now if you're wondering what Market neutral means the authors explain That it involves high frequency trading Which in turn requires these kinds of Hedge funds to keep lots of crypto on Exchanges The authors include the collapse of FTX As part of the terror contagion hence Their over-representation This also explains the

Over-representation of Market neutral Hedge funds in the use of Leverage more Than 80 percent of Market neutral hedge Funds are levered long or short this has The potential to cause lots of Market Volatility short liquidations could Cause rallies and long liquidations Could cause crashes now in terms of how The events of 2022 impacted crypto hedge Fund perception a whopping 50 percent Said that the collapse of Terra FTX Etc Has them feeling more positive about the Crypto Market This is presumably because it means that Most of crypto's Bad actors and over Leveraged players are gone well we hope This ties into the next finding and That's that crypto hedge funds are Heavily investing in ensuring they are Protected against counterparty risk AKA Making sure they're doing business with Reputable and well-capitalized entities At the same time their use of crypto Custody has stayed more or less the same At 80 percent over the years on that Note the authors asked crypto hedge Funds to specify how exactly they're Holding their crypto what's hilarious is That one of the options was quote on Exchange in Brackets commingled now not A single crypto hedge fund admitted to Commingling funds which given the Circumstances is not all that surprising Is it and if you're wondering most

Crypto hedge funds are using third-party Crypto custodians followed by Self-custody in a cold wallet and if you Don't have a cold wallet yet you can Check out the coin Bureau deals page for Huge discounts on the best ones the link Will be down in the description anywho The authors go on to unpack a few Findings about crypto hedge fund Activity on dexes and sexes they found That almost half of crypto hedge funds Are using dexes with uni swap being the Most popular this is in contrast to the Previous year when hedge funds were more Diversified in their deck's Choice as For the other half of crypto hedge funds That don't trade on dexes they noted Regulatory issues as being the primary Concern along with security risks this Potentially confirms that most crypto Hedge funds are not using kyc dexes in Which case you should again be aware of Who you're up against The authors apparently take it for Granted that every single crypto hedge Fund is using a centralized exchange Because the only question they asked About sex is were which factors crypto Hedge funds used to choose between them Liquidity security and altcoin selection Were the top three factors The fourth Factor was regulations and The fact that its fourth suggests that Crypto hedge funds don't care that much

About whether the exchanges they're Using are regulated if you do be sure to Check out our video about the best Regulated crypto exchanges the link to That will be in the description now this Relates to the next finding which was That more than 40 percent of crypto Hedge funds don't expect their Operations to be affected At All by U.S Crypto regulations this is surprising Considering that more than half of Crypto hedge funds have a U.S presence I'll let you draw your own conclusions About that one Regarding the regulations that crypto Hedge funds want to see they're the ones I mentioned earlier namely client asset Segregation mandatory Financial Audits And independent proof of reserves now Call me crazy but it looks like most of These requests are related to the Collapse of FTX and other exchanges What's fascinating is that the authors Also asked crypto hedge funds a couple Of questions about the tokenization of Real-world assets probably because it's Been all the rage with institutions of Late well the crypto hedge funds aren't That excited only 15 are exploring Tokenized real-world assets what's scary Is that the authors found that crypto Hedge funds are most excited about the Programmability aspects of tokenized Real world assets particularly when it

Comes to corporate actions dividends and Voting FYI programmability is a Cornerstone of Central Bank digital Currencies or cbdcs Finally the authors asked crypto hedge Funds to give some predictions about the Crypto Market 30 predicted that ethereum Will flip Bitcoin by market cap in the Next three to five years and that the Total crypto market cap will be higher At the end of this year than it was at The beginning a reasonable expectation If you're wondering how the flipping Could affect BTC and eth you can check Out our video about that using of course The link in the description Anyhow the second part of the report Takes a closer look at how traditional Hedge funds see the crypto industry and Market This part of the report is Paramount Because traditional head funds have way More Capital than crypto hedge funds What they do or don't do has a profound Impact on the market the authors start By reiterating that around 30 percent of Traditional hedge funds hold crypto Compared to around 37 last year however This time they add that the 30 of hedge Funds which do continue to hold crypto Almost doubled their exposure to seven Percent in other words they bought the Dip not only that but no traditional Hedge fund said that they planned on

Reducing their crypto positions this Year now this is surprising considering All the tail risks facing the crypto Industry it's also inconsistent with the Finding that a quarter of these hedge Funds are reconsidering their crypto Allocation and speaking of tail risks The authors found that traditional hedge Funds are very concerned about Regulatory uncertainty in the US and a Third expect their compliance costs to Rise as a result One-third also reported experiencing Difficulty accessing banking services Due to their crypto adoption I repeat One third of traditional hedge funds are Having a hard time accessing banking Services due to their crypto Investments This is very worrying and if this trend Continues hedge funds could have no Other choice but to drop crypto then Again crypto hedge funds are still Operating with these restrictions in Contrast to crypto hedge funds Traditional hedge funds are very bullish On the tokenization of real-world assets Around a quarter are exploring investing In this new Niche and a third of them Believe that the tokenization of real World assets will be the biggest Opportunity in crypto over the next year This is a bold belief considering that U.S Regulators have explicitly stated That they do not want the crypto

Industry to have any connections to the Traditional Financial system heck these Same hedge funds are reporting banking Restrictions as a result of investing in Crypto perhaps they know something we Don't Conspiracy theories aside it seems that The largest hedge funds are the most Skeptical about crypto the authors found That these hedge funds are waiting until The crypto industry matures I.E Regulations are introduced naturally They were turned off of crypto because Of the events of 2022 Terror FTX Etc the Silver Lining is that half of the Traditional hedge funds surveyed Confirmed that they will invest in Crypto when reasonable regulations are Introduced This underscores an idea that we've been Talking about a lot on the channel the Next bull market won't begin until Crypto has regulatory clarity The authors then give additional details About what traditional hedge funds have Been doing and what they are planning When it comes to crypto around half of Hedge funds already exposed plan to Increase their exposure whereas the Other half plan to keep it the same Again none will apparently reduce their Exposure The authors found that the top three Reasons why hedge funds are accumulating

Crypto is because of diversification the Long-term outperformance of crypto Relative to other asset classes and Quote Market neutral Alpha opportunities What's remarkable is that each reason Has a similar percentage lo and behold It's the largest hedge funds that are Investing in crypto for diversification Reasons as you can see traditional hedge Funds hold mostly BTC and eth in almost Equal percentages this is probably Because these are the only two cryptos That they can accumulate without Significantly disrupting the market the Authors go on to note that hedge funds No longer hold any nfts no surprises There what's also not surprising is that The authors found that more than 40 Percent of traditional hedge funds are Investing in crypto to earn yield This is being done via mostly custodial Staking followed by yield farming in Defy and non-custodial staking besides Tokenization traditional hedge funds are Bullish on defy what's concerning is the Authors also found that some traditional Hedge funds are bullish on cbdcs Thankfully almost double the amount of Hedge funds are bullish on stable coins Now this is significant because it Suggests hedge funds don't believe Stable coins will be banned The authors also identified the top four Concerns that traditional hedge funds

Have about crypto these are the Concentration risk and the lack of Transparency AKA offshore exchanges Access to traditional banking services AKA crypto crackdowns lack of Regulation Including tax and unreliable data those Last two stand out because they happen To be the two areas of concern that have Been repeatedly highlighted by Regulators around the world this could Be evidence that institutional investors Are contributing to the push for crypto Taxation and data collection which is Definitely something to think about case In point the authors then spend a Paragraph discussing the accounting Auditing tax compliance and risk Components of hedge fund operations as They pertain to crypto they also Underscore the concerns these hedge Funds have about the sec's proposed Crypto custody rules they want clarity The authors then pivot to the findings Related to the 71 of traditional hedge Funds that are not currently exposed to Crypto they repeat that most of these Hedge funds have more than one billion Dollars in assets and reveal that some Of these hedge funds had been exposed to Crypto in 2022. again the biggest hedge Funds are the most interested in crypto But half of the hedge funds that aren't Currently exposed to crypto don't plan On getting exposure to it in the next

Few years I'll remind you again that This survey was conducted in q1 months Before the spot Bitcoin ETF Mania took Hold This brings me to the big question and That's what all of this means for the Crypto Market well the short answer is That it confirms everything that almost Everyone in crypto has known for a while Now reasonable crypto regulations need To be passed ASAP in the US and Elsewhere in theory reasonable crypto Regulations have already been passed in Places like the EU In practice however additional Regulations are being proposed because Of events that have happened between the Time these regulations were first Written and the time they were passed Terror FTX Etc The two top concerns have been stable Coins and D5 both of which are now Facing potentially existential questions Related to Regulatory Compliance Governments want to set significant Restrictions on the former and they want The latter to comply with existing Regulations for financial services Significantly restricting the former Will do damage to the crypto Market Whereas compliance with existing Regulations will effectively destroy Defy and do serious indirect damage to Eth that's because the biggest D5

Protocols exist on ethereum and eth is The go-to collateral for most of these Protocols given the findings of these Two surveys it's possible that crypto Hedge funds are contributing to the Factors that are causing traditional Hedge funds to steer clear of the crypto Industry the elephant in the room is the Concentration risk which traditional Hedge funds identified as their top Concern It's clear that these crypto hedge funds Are heavily intertwined with offshore Exchanges and it's likely in their Mutual economic interest that the status Quo continues some would say it's also In the interest of those who are in Crypto for its potential to increase Financial Freedom not just for the gains Newsflash but crypto hedge funds don't Care that much about the ethos of crypto They're in it for the money and that Means that all they care about is Compliance the consequence of this Compliance is that most of crypto will Just become another part of the existing Financial system this is something that Most people in crypto don't want yet at The same time most people in crypto want Prices to go up as with most things the Solution is somewhere in the middle You could say that the regulatory issues Crypto has seen are a consequence of Both extremes trying to find this middle

From what we've seen the best outcome is That crypto-specific regulations are Crafted this is the angle that some Countries have taken but it flies in the Face of the quote same risk same Regulation principle that's been Parroted by the powers that be Same regulation means the end of crypto But no regulation also means the end of Crypto because it will eventually become Difficult and even impossible for the Average person to adopt it if guard Rails aren't set now from our Perspective most of these guard rails Should come in the form of Industry Standards but regulations are also Required the Silver Lining is that even If crypto regulations are created in Line with the same risk same regulation Principle it will make it possible for Pro crypto entities within tradfi to Lobby for more crypto-specific Regulations and it'll also be a test to See which cryptocurrencies are Decentralized and which are not and you Can find out what decentralization means Using the link in the description So that's all for today's video folks if You found it informative let me know by Smashing that like button if you want to Make sure you keep being informed Subscribe to the channel and ping that Notification Bell if you want to help Others be informed share this video and

Tell them to subscribe too be sure to Check out the coin Bureau deals page as Well it's got the biggest discounts on The best hardware wallets and up to Forty thousand dollars of bonuses and Airdrops on the most trustworthy Exchanges you can find a link to the Deals page down in the description thank You all for watching and I'll see you Next time this is Guy bidding you Goodbye Thank you [Music]

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